Vijay Anand | The Startup Guy.

Posts Tagged ‘Facebook

Social Networks are the way to the future. Ah, I can see people getting ready with pitchforks to nail me to the wall, but lets hear this out.

There is this basic ideology. The paradox of the masses. Whenever at any given network the number of members become too huge, the system starts to break down. It happened with all other social networks, it happened with the internet before that, it happened with ICQ, it happened with Orkut, and it will happen with Facebook. Lets take the case of Orkut, and with a much more real life example to follow it. Orkut was great till it was reference based, and then case the day when it was opened up to everyone and then the masses came in and so did the “frandship” requests. Long story short, I deleted my account in Orkut and am hiding in Facebook till that eventual doom also arrives at the door step of Facebook.

I think this is the logical thing that is going to happen to facebook. Imagine that you are part of an elite club such as the Lion’s club (if it is elite enough) or lets take the Madras Club (known for its elitism) and you were part of the elite 50 and you knew everyone who was part of the club. Most of the members in that club enjoy that lifestyle and keep it closed for the very nature that they dont want to democratize it. Lets say that they do, what is going to happen is that there will be 300+ people flowing in, soon you realize that you dont very much “belong”.

In the first order of things of all creatures, the necessity to belong is a crucial one. When that starts to erode, everything starts to fall apart. In my visual imagination, its like a tower that rises and rises, till it eventually starts to crumble under its own weight and falls apart, that smaller networks start to arise out of the ashes of the parent.

All this is to state one thing. The future of social networks is one where there will be niche verticals that will get created for various things. Imagine meetups with a social networking aspect and that is what will happen. Now this is happening in some level with Ning . But the issue with Ning is two fold. One it cant get out of the domain name of Ning.com (which can be easily fixed), and the other is the fact that I need to recreate the membership everytime. What if I create a new “community” pretty much like what we do inside orkut or Facebook, but outside of the walled garden?

So the future is pretty much a case where there will be skeleton frameworks available so that one can give it the look, and theme it to what they want, all the way from Mac Cultists, to Cricket Fans to whatever one fancies, and the social linkages will be drawn out of Opensocial. Using the linkages one can easily pass on how one’s friend is part of a new network and can draw out a larger easily accessible audience for each of these interest groups.

Now comes the fancy bit. Each of the these verticals will need to be monetized to be sustainable. And just as facebook has Beacon, there is a need for a Unplugged beacon which can power these networks and make these initiatives sustainable. Given that they will be such a niche target area, getting an audience of say 40,000 – 60,000 for each genre would be fairly simple and would make for a very focused approach for these marketers and advertisers. There will be new ways and means of delivering the content, message and engaging those audiences.

There is most certainly an opportunity to tap here, especially as we start to see eCommerce on the rise in emerging markets with such staggering numbers.

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Disclaimer: This is just a theory. Not the fact.

The war between the giants, Microsoft and Yahoo continues. But none of the threats, nor the position that Yahoo is in, seems to be putting a brake on the companies they are going around acquiring, nor the services they are releasing. Life is as normal, infact on a fresh new lease – one that is quite agressive for Yahoo!.

So here’s a theory that I have, and time will tell how much of this is true.

The following things seem to be happening:

1. Yahoo is very pissed off at Microsoft.

2. Yahoo has been for the longest time wanting to get into what Facebook is doing. And now it does. – the open platform shabang.

3. Yahoo is working on a whole new ad delivery platform.

4. Yahoo has an amazing advantage of close to 5 million new email signups every month in India alone – which is actually ahead of what Google has, followed by I believe either Indiatimes or Rediff.

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I think I have figured something. It goes something like this.

Markets and Companies are neither created nor destroyed. They just transform from one form to the another.

I’ll give you some examples. Amazon.com when it started in 95 was a very ambitious project. A few years later, they were raking in 30million dollars as revenues. But where did that money come from? Very few people think about it, but customers are a finite set. God isn’t growing customers on trees yet. So essentially what happens is that since the need hasn’t exemplified, just found a better solution, people switch from one service to another. The year that Amazon.com announced its $30mn revenue stream, the music and bookstore industry had lost close to 2billion dollars. Disruptive? Yep, if you are a startup and on the growth curve, very much so. Scary? Absolutely. Especially if you are three days old and even have a handful of customers.

I think this is a very basic understand that we need to have. Markets are not created. All this talk on Markets, and blah is just a segmentation process that economists and entrepreneurs have to work with to figure out how to shape their product. The truth is that there are consumers and consumers or clients are essentially people. And People are finite. if you work backwards, then so are markets.
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Disclaimer: These are just rumours. Tell me if they are true.

1. I’m hearing reports that a social networking site, one of the investments of Sequoia and ,the SN offering of reliance (Note: Update below) are both finding it hard to scale up and might face the inevitable very soon.

Is it true? if it is, then does this mark the fact that Social networking is a big No-no in India and whatever mass we had that was buying into that story have already sold their souls to orkut and facebook? How many users does Fropper have?

2. How are sites like techtribe doing?

3. Do you realize that the largest possible userbase is possibly the job sites like Naukri.com, and matrimonial sites like BharatMatrimony and Shaadi.com?

4. Given that in India, we have a fixed number of users who are perenially online, and do have the mindset and the bandwidth to “socially network”, wouldnt it be better to perhaps create an OpenID system, perhaps like the one that yahoo has created (openid.yahoo.com) to login into all of these sites, which would possibly also benefit all of these sites? Or is that something OpenSocial has to solve?

Do pitch in your thoughts.

Update:

It does seem that the Rs.100 crore that has gone into Bigadda and the marketing that it is undergoing, is essentially driving a lot of traffic. A quick alexa search with comparison to the other contenders show some pretty interesting trends.

Bits and pennies, (Thanks Sabah Kazi) has an interesting graph that shows the trend (using alexa)

So its quite apparent that there is a quite a bit of traffic being driven towards the site – actually some tens of millions.

I’d like to see a analysis on the conversion rates that are going on, the total traffic, the new user sign ups, and the breakup of active versus passive users.

One thing is clear, with the sheer amount of money pumping in, Bigadda.com might stick around for a while.

Facebook is undoubtedly enjoying its fanbase, and with more and more people moving to facebook (even from networks such as Linkedin), it only strengthens the case. As of today it seems that Facebook has even gone after some of the popular bands to setup their pages in facebook so that profiles can be created as “fans” of these bands.

Social networking has taken on a new life with facebook and with their wise choice in opening up a limited set of APIs to test the water in terms of user applications.

But we are nowhere close to what socially-networked applications can really do. It might hold the key to some of the most complex problems that we face as we enter into the digital lifestyle of instant messaging, emails (flooded with invitations from SN sites), and bugged down on the phones – with mobile phones even bringing work along us in vacations.

Truth be told, we are yet to even scratch the surface of what digital living really means. Let me get to the details:

Imagine ourselves to be the centre of the universe and everybody we know to be connected by different means. We either know people directly, or through someone else. Yep, its the same concept that Linkedin denotes as 1st, 2nd and third degree networks. The unfortunate thing is that, we keep making this definitions in everything that we use. From our email clients, to our telephone priorities to the list of people that we converse often and hence would like their names on top on our favorite IM clients. Relevance is key in digital communications and it has yet to hit our lives.

Now, its not as if people have been oblivious to this problem. There are companies such as Iotum which have been working on creating what they call a rules-engine, which routes calls depending on who is calling to whichever device. Its as simple as, if your mom calls she will reach you on your mobile phone even if you are in the middle of a meeting, and if your boss calls, he gets the voicemail no matter what. Well, that might not be your choice of settings, but you get the point. Everybody is given priorities and those priorities automatically shift by the amount of conversations that are carried out. Have frequent calls with someone and their priority level goes up a notch, so that instead of the voicemail, one gets to land in your landline phone. There is also another beauty to this sytem: the fact that there is one common number that is given and all your other numbers – mobile, landline, office and etc are only known to that system. As far as the whole world is concerned, you could change your mobile numbers a zillion times and they wouldnt notice. An update on the system and it will keep routing calls as if nothing ever flinched. One number for life, and that is all that you have to give anyone without prejudice. How important they are, and how and on which device… well the system will determine that. Now tell me who wouldnt love such a system! This is precisely what Grandcentral offers.

The problem ofcourse is that the “rules” and the relationships you have with those on the address book have to be defined by you – as of now. It wont be the case once social graphs start to make sense. And thats what Opensocial APIs are after. That’s where Google, if it plays its cards right will mint its money.

Take it one step forward, and the dream word that most used to throw in making a pitch to VCs in the 90s will come back to life – convergence and unified communications. Imagine a system that can manage your IM, emails, telephone calls, and will prioritize them as per the interactions you have with them and will give YOU the flexibility to manage communications, rather than 2000 unread mails staring right at your face each morning. That’s freedom indeed. That’s when you start having a glimpse at what digital communications really is all about!

So did Facebook start a trend of opening up its APIs for third party applications? Absolutely. Is it the end? Nope. We definitely need to go beyond that and the limitations that one has in having to develop more rich, flexible and feature-rich applications within the limited interface and the functionalities of facebook, simply isnt possible. The platform, simply wasnt built for it. Instead, take the relationships (A.k.a Social Graph, as defined by Brad Fitzpatrick) and make them available for anyone to access and develop on, and you have just unleashed a whole new world of interaction.

The Bubble is back again. Facebook is grossly-overvalued. I am turning green with envy at the guys who are raking in money. This is not going to last. Facebook should go public.

I hear many such comments at the recent news that facebook is valued at USD 15 billion.

Hold your horses, will ya?

Microsoft has bought a less than 2% stake in the company at about USD 240 million. People are extrapolating it to the point that if 2% of it is worth 240 million, then 100% puts it at 15 billion. The calculation is all wrong.

A 2% stake in Facebook, for microsoft is worth 240 Million. and thats all there is to it. What does Microsoft get out of this entire deal? A foothold on trying out their advertising network on Social Network – and on one of the most popular.

Does it make sense for Microsoft to do this? I think its perfectly justified. Facebook makes around 140 Million USD on revenues – and most of this revenue would be through advertisement. If the Advertisement revenues that they make are around that much, imagine how much the guys behind the advertisement network would be making. Microsoft would rake in back whatever they have invested quite quickly.

Also, this is a way to keep google or their alliance Yahoo! from getting in there. Its most probably considered as a marketing cost that can be recovered in no time. In all this, there is the added reputation that is built, saying Microsoft is getting agressive in the web space.

So, Is Facebook worth 15 billion? Nope. Is that 2% worth 240million to Microsoft? Absolutely.


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